Marcellus shale fight heats up in New York

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 29 -- The Independent Oil & Gas Association of New York has urged Gov. David Paterson to remain committed to his draft State Energy Plan, which supports the expansion of natural gas exploration in the Marcellus shale.

"We believe that New York cannot afford to turn away or postpone the tremendous opportunity for economic resurgence and a clean energy supply presented by the Marcellus shale," IOGA said, along with a coalition of business and economic development groups.

The letter was delivered as New York’s Department of Environmental Conservation nears the end of a 2-year process to develop a draft Supplemental Generic Environmental Impact Statement (SGEIS)—the set of regulatory standards that guide natural gas exploration and extraction in the state.

The draft SGEIS proposes stringent new regulatory standards to monitor gas exploration in the Marcellus shale.

“The extremely stringent requirements proposed by the SGEIS provide the public with the necessary oversight that natural gas exploration and extraction will be conducted in an environmentally safe manner," the letter said.

The letter followed earlier reports that New York City urged the state to ban natural gas drilling in its watershed, becoming the most powerful opponent to date of a process that critics say is poisoning drinking water.

Putting the city at odds with the gas industry, Steven Lawitts, the city's top environmental official, said hydraulic fracturing or fracing techniques used to produce the gas represented “unacceptable threats to the unfiltered fresh water supply of 9 million New Yorkers.”

According to Marc LaVorgna, a spokesman for New York Mayor Michael Bloomberg, “Based on all the facts, the risks are too great and drilling simply cannot be permitted in the watershed.”

At that time, Gov. Paterson, who will play a major role in deciding the future of drilling next year as he slashes state services to close a $3.2 billion budget deficit, said he was still listening to "all points of view."

Paterson told reporters, “We've actually extended the public comment period because of the grave concern that so many who we trust, like the mayor, are raising in this issue.”

Earlier this year, New York proposed new rules that would allow drilling for natural gas in the Marcellus shale formation. New York City is asking the state to exclude the watershed from the areas that can be drilled.

Spectra expansion
The IOGA letter coincided with reports that Spectra Energy Corp. has signed binding precedent agreements with Chesapeake Energy Corp., Consolidated Edison, and Statoil Natural Gas.

The agreement calls for an expansion of Spectra’s existing Texas Eastern Transmission and Algonquin Gas Transmission pipeline systems to deliver "new, critically needed" gas supplies to the New Jersey and New York area.

The proposed pipeline would be capable of transporting up to 800 MMcfd of gas supplies to the region and is targeted to be in service in fourth quarter 2013.

Aspects of the proposed expansion include:

• Construction of a new, 16-mile pipeline extension that connects Texas Eastern’s existing pipeline in Staten Island, NY, to a new interconnect with ConEd in New York.

• Replacement of 5 miles of existing pipeline in New Jersey and New York with larger diameter pipeline.

• Additional facilities on Spectra Energy’s existing Algonquin pipeline system.

Chesapeake Chief Executive Officer Aubrey K. McClendon said his firm’s “industry-leading position in the Marcellus shale provides the perfect supply source to help energy consumers in the New York City area reduce their dependence on expensive imported oil and carbon-heavy coal.”

Contact Eric Watkins at hippalus@yahoo.com.

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